Town of Lunenburg CAO warns of long-term financial outlook, lists tens of millions in anticipated costs to maintain assets

(Photo by Jesse Ward)

The Town of Lunenburg held a public presentation on the town’s financial outlook for the next 5-15 years at a Special Meeting of Council on May 16.

Jamie Doyle, Chief Administrative Officer with the Town of Lunenburg, gave a 17-minute presentation developed on information provided by town staff, listing dozens of data points adding up to tens of millions of dollars in spending the Town cannot afford over the next five to fifteen years.

Doyle emphasized the need for the Town to be proactive in having a financial plan rather than “running year-by-year, crisis-by-crisis,” and spoke of his efforts to direct staff towards this through pursuing more grants and identifying a prioritisation schedule for required capital spending.

Notably, Doyle said the Town is pursuing a grant of more than $16 million from Parks Canada to fund some capital projects – Parks Canada is Lunenburg’s liaison to UNESCO, and the Town does not currently receive ongoing federal funding towards costs associated with maintaining the UNESCO World Heritage site status for Old Town Lunenburg.

CAO says Town faces “absolute necessity of a comprehensive financial plan,” Lunenburg has four major areas where they cannot commit to required spending

The presentation presented dozens of figures totalling tens of millions of dollars – almost completely guided by estimates by town staff – for necessary and optional maintenance and upgrades for town-owned buildings, and infrastructure spending – that either need to happen or would ideally happen over the next fifteen years.

Doyle started his presentation saying his intent was to provide a high-level overview of the financial requirements facing the town over the next 5-15 years and “inform council of the absolute necessity of a comprehensive financial plan.”

Doyle summarized the presentation saying the Town sees a consistent increase in capital requirements for aging and soon-to-be-aging infrastructure, which is not uncommon for municipalities in Nova Scotia. 

He said Town staff “have done a wonderful job ensuring operations continue, and in most cases with the exception of the last year or so, have been very much in a reactive state, when in reality we need to be in a more proactive state.”

Doyle said staff “identified four major areas for capital spend with no financial ability at this time to commit to them in totality”: buildings, infrastructure, water and wastewater operations, and the electrical utility.

Report on town-owned buildings lists anticipated necessary and optional costs for maintenance

The presentation started with a report on the town’s building portfolio.

For each of the seventeen buildings owned by the town, Doyle reported on some of these factors, but not all of these factors, for all buildings:

  • condition
  • debt
  • operating costs
  • revenue
  • use
  • anticipated costs for required maintenance and upgrades
  • anticipated costs for optional maintenance and upgrades

The anticipated costs mentioned for maintenance and upgrades were timed from projects that are in progress currently up to work that should happen in the next 15 years, and covered a vast scope of work – from $15,000 for general maintenance to the town’s public washroom, to $10 million for repairs to the exterior and interior of Town Hall.

In response to emailed questions from The Barnacle, Doyle writes, “All cost projections are an estimate based on staff experience and understanding on project costs. Each example is an estimate as explained in the document as well as the presentation. Any firm numbers would need to be determined through a tender and design process.”

Doyle notes the exception to this is for Town Hall’s exterior repairs, which had an estimate for $3.38 million in a study last year.

Town estimates Town Hall requires $10 million total in exterior and interior upgrades

Doyle’s report said Town Hall is in “Poor Condition”. The building has no debt but ranges from $55,000 to $85,000 for annual operations and maintenance with fuel being a major cost.

The Town is estimating approximately $10.1 million in necessary repairs for Town Hall.

Doyle’s report says: “There is an immediate spend in this year’s capital budget of $100K to repair the retaining wall that is on the Townsend Street side. We also anticipate a $5M spend on exterior upgrades as well as $5M for interior upgrades.”

In October 2022, the town received a report from engineering firm Fishburn Sheridan Atlantic Inc. suggesting preliminary costing for maintenance to Town Hall at $3.38 million for necessary repairs to the building’s exterior.

In an email to The Barnacle, Doyle writes, “That figure of $3.38M plus a contingency of 10% along with understanding on cost increases over time, we estimate the cost to be near $5M. Additionally, there was some destructive testing done to the masonry that indicated a needed increase the capital cost $580K which would be included in that $5M.

Doyle said the Town has applied for “significant grants” to fund this maintenance, but has not heard back on the success of these applications.

Town says Old Fire Hall would cost $1 million to “bring to a rentable state”

The Town’s building at 40 Townsend Street, known as the Old Fire Hall, has sat vacant for more than a year. This is after the Town did not renew leases with the buildings’ tenants, Blue Zone Wellness and Fitness Centre and NSCAD University, in 2021.

Doyle’s report said it would cost $1 million to bring the Old Fire Hall to a “rentable” state but did not include any details on any specific issues with the building that made it unrentable. 

The report said it would cost “$2M to bring up to standards – making the building tight, improve structural integrity and energy use.”

Asked for details on why the Old Fire Hall is currently unrentable, Doyle writes, “The interior of the building is in disrepair and our experience has illustrated these renovations normally see fairly substantial costing.”

The decision to not renew leases for the building’s last tenants was discussed at a private in camera session of a town council meeting in 2021. The Town has not cited the condition of the building as a reason for not renewing the leases and has not announced any plans for the property.

When asked by The Barnacle in February 2023 about the Town’s plans for the building, Michael Best, Communications Manager for the Town of Lunenburg, did not address the building directly, replying, “The Town is evaluating all Town-owned land and buildings and considering future use(s) which may include the sale thereof.”

Doyle’s report said the building had a debt of $12,000 and operating costs ranging from $23,000 to $32,000.

Town says they are “working with the Lunenburg Academy Foundation to better understand costs” to operate Lunenburg Academy, while Foundation president says the Academy should not be for sale

For the Lunenburg Academy, the Town says they are waiting for the results of the Lunenburg Academy Foundation’s (LAF) feasibility study to understand the costs associated with operating the building. The feasibility study is due at the end of May.

The LAF pursued a feasibility study for the operational costs and requirements of operating the Academy after the Town of Lunenburg offered to sell the Academy to the LAF in April 2022.

While the Town’s report says “the Town is working with the Lunenburg Academy Foundation (LAF) to better understand costs associated to operate and maintain this asset,” the offer of sale to the LAF came to them by surprise. 

In an interview with the South Shore Breaker published May 17, LAF president and former Mayor of the Town of Lunenburg Rachel Bailey says the Town did not provide funding for their feasibility study, and that the Academy should not be for sale.

Doyle’s report said in general, the cost to operate the Academy ranges from $30,000 to $40,000, excluding capital costs.

Doyle said the town has not invested in any capital improvements to the building in the last two years, however in the years 2018-2020, there was a capital investment of approximately $2.1 million from the Town alongside provincial, federal grants and donations.

Doyle said “the building itself is in fair condition, the heating system is starting to near the end of its expected life cycle, the foundation is currently in poor condition and the energy efficiency is very poor.”

“To summarise, the Academy, on face value and operations can be a wash, however, in the upcoming 3-5 years there will be significant capital investment required. We always seek out available grants but we can’t count on them until we have the money in the bank.”

Broad estimates shared for other town-owned buildings

Doyle’s report shared information on another 14 buildings.

Notably, the Town reports that the Community Centre is “in fair to poor condition with an estimated $5M to restore the building to a good operating condition – building envelope upgrades, accessibility upgrades, new auditorium floors, etc.”

Additionally, the report says the Old CN Station that hosts Second Story Women’s Centre is in poor condition and staff have estimated a long-term capital investment of “~$2M for interior and exterior upgrades.”

The report has been digested by The Barnacle according to what was mentioned in the report on the condition, debt, operating costs and maintenance expenses cited for the rest of these assets.

AssetConditionDebtOperating CostsMaintenance expenses cited
Water Treatment PlantGood Condition$365,000“nearly $365k”“This asset is in good condition, however it does not negate the need for good capital planning to ensure its lifecycle is maximized. In this capital season we have allocated nearly $10K for routine maintenance.”
Armouries BuildingPoor ConditionNot mentionedNot mentioned“In next year’s capital budget we expect to propose an allocation of ~$50K for exterior improvements such as painting and windows. In the longer term (5-7 yrs) we’ll require an allotment of nearly ~$4M to improve building structure, energy efficiency, paved parking,and safer access and egress onto Townsend Street. We’ll also need to improve the workshop – new floor, oil separation tanks, designated welding area, etc. “
Pump House 1, Pump House 2 and Raw Water Intake BuildingReasonable ConditionNot mentioned“Collectively, these assets generate an operating expense of $50K – $85K per year.”“These assets […] carry capital costs totalling approximately $60K in the coming years – nearly half coming in the 23/24 Capital Budget. The other half in the next three years or less would capture items like windows, doors, siding and concrete work.”
Wastewater Treatment PlantFair Condition“We carry a debt of just over $188K for the plant and $424K fordistribution.”“Approximately $740K per year”“This asset is in fair condition and will see significant improvements with a $10M plant/expansion upgrade. The Town’s contribution is ~$2.6M.Final costing will be determined at design and tender process. The Town’s financial commitment will be an investment from debt and reserves.”
Brook Street Lift Station and Bluenose Drive Lift StationFair ConditionNot mentionedNot mentioned“We’re estimating $150K for roofing, interior and exterior works, heating, and LED lighting. We also need to invest ~$500K to expand the building footprint of the back harbour lift station (Oxner Drive) for improved workspace that would involve staged construction with multiple trades,installation of LED lighting and water service installation. “
Victoria Road BuildingFair Condition$0Not mentioned“$10K in 2023/24 for a new overhead door$40K in 24/25 for re-siding (portions only)$500K in the medium to long term for building envelope upgrades$25K in the same timespan for a washroom in the carpenter shop.”
Old CN StationRelatively Poor ConditionNot mentionedNot mentioned“In the short term, we anticipate a cost of approximately $13K to repair and or replace windows and casings. In the long term we anticipate acapital investment of ~$2M for interior and exterior upgrades.”
Fire HallGood Condition$0Not mentioned“Over the next 3 years we anticipate a required capital investment of~$90K for roof reseal and repaint and $145K in the 25/26 capital budget forconcrete apron replacement.In the long term, we anticipate a capital investment of approximately $1M to maintain the condition of the fire hall.”
Public WashroomGenerally Good ConditionNot mentionedNot mentioned“The public washroom […] does require some upgrades – windows, paint and roof patching etc.In the short term we can expect to invest $15K and in the long term, approximately $200K.”
Community Centre and ArenaArena: “Relatively poor condition.” Community Centre: “Fair to poor condition.”“These buildings carry a debt of just over $75K”“[…] close to $500K per year. These costs both in and out capture grants, rental rates and costs to run and operate the facilities – including salaries. ““The arena is in relatively poor condition and we anticipate a short term capital investment in 23/24 of approximately $50K to address accessibilityissues as well as a compressor overhaul.
The community centre is in fair to poor condition with an estimated $5M to restore the building to a good operating condition – buildingenvelope upgrades, accessibility upgrades, new auditorium floors, etc.”

On the issue of infrastructure and roads, “the monetary commitment becomes monumental”

On the topic of infrastructure, Doyle said the Town’s recent paving of Duke and Prince Streets was nearly half a million dollars, “and we have over 250 blocks to maintain and lifecycle. Apply that cost, the monetary commitment becomes monumental.”

The town is anticipating sidewalk replacements at nearly $1,000/metre, and sidewalk renewal at $500/metre, based on external consultants and contractors. Water and roadwork replacement is $2,700/metre. The town is servicing a debt for sidewalks at $403,000.

“As we move towards our next capital budget cycle, it should be in late fall. We need to build a reliable financial plan that includes multi-year capital spending combined with responsible borrowing strategies,” said Doyle.

“Though we plan for and anticipate grants from other levels of government, we cannot depend on them. In that same vein, we cannot depend on land sales as we cannot predict what that outcome will be.”

“We can, however, begin to understand tax revenue that will result from land development in perpetuity, not just immediate injection of capital cash, although that’s certainly nice.”

“Through the next budgeting cycle staff will propose budgeting that uses borrowing and grant synergies and other available tools to move forward in this most financially responsible manner.”

Electric Utility’s $15 million required investment addressed

On the topic of the Town’s Electric Utility, Doyle referenced a report reviewed by Council at the April 25 council meeting that shows a 15 million dollar capital investment required to bring the town’s electric infrastructure up to standards.

Town staff are currently exploring these options for the Electric Utility:

  • Sell the utility to Nova Scotia Power or another organisation.
  • Keep the utility and renew the existing service contract with Nova Scotia Power or another provider.
  • Keep the utility and re-establish staff to operate and maintain the utility.

A recording of the April 25 meeting is provided by the Town here.

CAO says Town needs to be an organisation of proactivity rather than “running year-by-year, crisis-by-crisis”

“In closing, we have much work to do to turn the page to be an organisation of proactivity rather than running year by year, crisis-by-crisis, to be reactive to our environment,” said Doyle, concluding his presentation.

Doyle said that as of late, the Town has been “working very closely with other levels of government this year to try and balance the cost of maintaining a UNESCO World heritage designation with the financial realities we face.”

“We are hopeful that we have more attention from those levels of government than ever before, and certainly do hope we receive some funding to help ease the burden of taxpayers.”

Councillor Halverson asks about grant opportunities, CAO says Town has applied to Parks Canada for a grant for more than $16 million and staff are “pushing through every grant application they can”

Councillor Ed Halverson asked Doyle what grant opportunities the Town is looking at for funding the kinds of capital costs addressed in the report.

As an example to how this can be achieved, Doyle referenced the Town’s upcoming upgrades to the Wastewater plant where the Town is committing $2.6 million and the Province of Nova Scotia is committing $7 million.

Doyle announced the Town has applied for a grant for more than $16 million to Parks Canada to fund some capital projects. Doyle said the grant would be to help manage the UNESCO designation and the Town’s infrastructure that gets worn every single year, and also to start rehabilitating Town Hall.

He said staff are pushing through every grant application they can.

Councillor Halverson asks about whether its best for assets to be town-owned to maintain heritage, CAO says yes – Town is asking Provincial Government for money

Halverson asked Doyle whether it is better for the Town’s buildings to be owned by the Town in regards to heritage and maintaining a UNESCO status.

Doyle said it would be best if these assets could be town-owned “if we had the available funding and support from other levels of government.”

“The fact remains that we don’t.”

He said staff are compiling a “very comprehensive report” to Parks Canada about the State of Lunenburg from a heritage perspective.

“I think we’re the only one that doesn’t receive money,” said Doyle. “I’d be embarrassed to try to figure out how much Quebec gets. So we’re pointing out discrepancies like that to the Provincial Government to suggest that their lack of commitment to the town of Lunenburg to help manage these heritage designations and UNESCO is unacceptable.”

“So if we had the available funding support, sure, I think it would be valuable for the town to keep hold of these and steward them as necessary. But currently, we just can’t afford it.”

Councillor Sanford asks how to determine what Town residents want for electric utility

Councillor Susan Sanford said she has given the electric utility a lot of thought since the April 25 Council meeting where options for its future were analyzed.

“It was very worrisome,” said Sanford. “I look at that report and think about the benefits of maintaining and keeping the utility, and the risks and the challenges that come along with that. I think about the long-term commitment that residents of the Town of Lunenburg have to mitigate that risk.”

Sanford said she wonders how Council can understand what residents want for the utility, “because I feel like it’s their long-term commitment that needs to guide us and our decision-making, because they’re the ones that are going to be taking the risks, ultimately.”

Doyle said he thinks the $15 million cost to service the utility is “the red herring cost,” that the Town could borrow to service the utility, and that his concern is with the risk to keep a service level for the utility – including the challenge of hiring and retaining specialised staff to operate and maintain the utility if the Town chooses that option. 

He said staff are also looking into leveraging other levels of government to help with the $15 million.

He mentioned a staff report will come to Council on this topic. He did not explicitly address Sanford’s question around how to understand council’s decision would be guided by public opinion on the options.

Councillor Duggan asks how increased tax revenue from housing sales is affecting town finances

Councillor Melissa Duggan asked how the increased tax revenue from housing sales is affecting the town’s finances.

Doyle said, “the sheer number that we’re going to try and grapple with over the next decade is fairly large. I don’t think there’s enough generated in that tax increase to make a dent.”

Doyle asked Kathleen Rafuse, Senior Accountant with the Town of Lunenburg, for more information.

“When you’re looking at a $47 million dollar investment that we’re going to have to do over a number of years, we’d have to have significant assessment growth,” said Rafuse.

“When we were doing our taxation this year you could see that maybe we had about 10 new accounts that had been formatted since last year, which brought maybe $700,000-$800,000 to the table for assessment value, not tax value,” said Rafuse.

Councillor Halverson asks if Town has borrowing capacity to do all the work needed in next 5-10 years, CAO says Town is approaching borrowing limits and “things can wait to some extent” but it’s uncertain

Halverson asked if the Town has the borrowing capacity it would need to do all the work it needs in the next 5-10 years.

Doyle said, “We are certainly approaching our borrowing limits. That’s the importance of a financial plan, to figure out what that looks like.”

Doyle said the Town “has to start looking soon” to develop a timeline for what maintenance is required at what point.

Acting Mayor says he finds the numbers the Town is facing “daunting, almost incomprehensible”

Peter Mosher, Acting Mayor, shared his perspective on Doyle’s report, saying he finds the numbers “daunting, almost incomprehensible.”

“You know, when you’re talking these type of figures, I usually like to break it down […] to how it affects an average homeowner,” said Mosher.

Mosher asked Doyle to come back to council at a later time with some numbers on assets the town could potentially divest that would show Town residents how much they are paying for assets in a given year, versus how much of a revenue could be generated by the asset for the Town after it is sold.

Mosher used the old town library at 19 Pelham Street that was sold and now privately owned as an example. Doyle said he would need to look into what was legally possible to release regarding the recurring revenue generated by the sale of that property.

Councillors ask questions on extending lifecycle of wastewater treatment plant, Town accessibility requirements, Town’s responsibility for managing properties

Sanford asked if the Town is going to look at separating its wastewater and water operations. Doyle confirmed the Town is going to do this. Tyson Joyce, Town Engineer, said a GIS modelling project is nearing completion that will identify the biggest impact the Town can achieve with projects like these.

Halverson asked about whether the assessed upgrades for Town Hall include the accessibility requirements the Town is meant to have by 2030. Under the province’s ​​Access by Design 2030 framework, all government buildings are meant to reach accessibility standards by 2030. Doyle confirmed these requirements are included in the Town’s analysis.

Halverson also remarked on Doyle’s report saying managing a building portfolio like the Town’s is outside the core function of a municipality, and asked Doyle to elaborate on this.

“Being in the landlord business is typically not in the core responsibilities of a municipality,” replied Doyle.

“There’s a number of heritage buildings that would certainly, if we had available funding, could fall within that, because it’s up to us to make sure we maintain that heritage status and make sure that it’s treated properly and stewarded well.”

“So, typically the management of buildings is not a core municipal function. Water, sewer, garbage, pickup, streets, snow removal, things of that nature, are more core services.” 

Notably, recreation is also a core municipal responsibility and has a dedicated department in the Town of Lunenburg, and two of the buildings listed in Doyle’s report were the Community Centre and Arena.

Two councillors did not address any items

Lunenburg has five councillors in addition to Acting Mayor Peter Mosher: Jenni Birtles, Melissa Duggan, Stephen Ernst, Ed Halverson, and Susan Sanford. All other than Mosher are in their first term as councillors.

Councillors Birtles and Ernst did not say anything at this meeting.

You can watch the entire meeting at this link provided by the Town, and see the CAO’s speaking notes at this link.


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